Foreign Direct Investment and the Management of Political Risk

Author

Pensiri Disyadej, Fontbonne College

Year of Award

1985

Degree

Master of Business Administration (MBA)

College

College of Business & Professional Studies

Degree Program

Business

Department

Business Administration

Keywords

Foreign Investment, International Investment, Guyana, World Development, Political Stability, Aluminum, Demba

Abstract

This paper will show that despite the need for extension of foreign direct investment in the form of multinational corporations to capital-scarce, developing countries, political risk creates a gap between the demand and supply of foreign investment.

In Chapter II, the patterns of foreign direct investment are analyzed. Chapter III reviews the various sources of political risk and concludes that the existence of political risk is an obstacle to the formation of an optimum investment level. Political risk may take the form of new operation restriction, nationalization and expropriation of a corporation. Chapter IV discusses the relative positions of the developing countries and the multinational corporations. The lack of experience in the new independent countries leads to impasses. By the time experience is gained, many corporations can be hurt. Chapter V presents a case study which illustrates the effects of political risk on foreign direct investment. This case relates to the nationalization of aluminum mines after the independence of Guyana. Chapter VI suggests ways the political risk could be minimized.

Finally, the conclusion of the research briefly summarizes the role of political risk in foreign direct investment.

Document Type

Restricted Thesis

Recommended Citation

Disyadej, Pensiri, "Foreign Direct Investment and the Management of Political Risk" (1985). All Theses, Dissertations, and Capstone Projects. 609.
https://griffinshare.fontbonne.edu/all-etds/609